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Peak Re CEO: In Reinsurance, Diversification Helped in 2017

SINGAPORE, Mar 08, 2018, (A. M. Best via COMTEX) --

Franz Josef Hahn, chief executive officer of Peak Re, said the reinsurer spreads its risks across multiple continents, allowing it to take losses across many catastrophes with limited financial impact. Hahn spoke with A.M. BestTV at the 18th Asia CEO Insurance Summit in Singapore.

View the video version of this interview at: http://www.ambest.com/v.asp?v=hahn218

Following is an edited transcript of the interview.

Q: Let’s start by assessing the performance of Asia’s reinsurance market last year. How would you categorize it?

A: It was a very challenging year. When you think about it, that normal natural catastrophes like Typhoon Hato can cause such a trouble to the reinsurance industry in Asia, then you know precisely that structurally there is something wrong.

At Peak Re, we have been doing quite well. We have been staying away from insuring and reinsuring casinos because the business interruption losses are very difficult to calculate. Out of principle we don’t do this. We had a nice miss in this respect.

In general, reinsurers from Asia-Pacific who have been writing international markets, like ourselves, we had many more surprises also in the North Atlantic, with the HIM (Harvey, Irma, Maria) losses. It was a challenging year for most but we got through it.

In Peak Re, we got through it quite nicely. We haven’t published our results yet, but I can say that we had a very good year.

Q: In the U.S. and Caribbean cat events, how did that affect your results last year?

A: They did affect our results naturally but not beyond what we were expecting. The HIM losses together, for Harvey, Irma, and Maria and the wildfires, they were still under 5% of shareholder assets. We expect in the worst year to lose up to 10% of our shareholder value. This one was under 5% so we have been doing quite well. Risk management was working.

Q: Recently Peak Re announced Prudential Financial’s 13% acquisition of the group. How will this deal impact your business going forward?

A: First of all, I have to say that my colleagues and myself, we are absolutely delighted about this. It couldn’t have been better. A blue chip company like Prudential is a fantastic partner to have and we are very proud of having them. This will impact us not to the extent that we will change our business strategy. We will maintain our business strategy. It’s a tested one now for five years. We will go on like this. It will impact us from the reputation of the company. It will impact us from possible synergies with Prudential. It’s very positive good news for us.

Q: In November, you also announced a new license approval here in Singapore. What’s your plan and how significant is Singapore to your growth plans for the region?

A: We have historically had a very good relationship with Singapore companies. Really, Singapore companies writing Singapore business and that’s what it’s good for. We want to have a license not to build an office but to operate out of Hong Kong into Singapore and to give them a better quality job of approval by having the MIS approved license. This will possibly change our relationship with life companies in Singapore. We have already very good relationships on the P/C side. We aspire to underwrite more life business in Singapore as well.

Q: How will this change those relationships?

A: In a positive sense because from a regulatory perspective the companies do not need to have an extra charge on their capital for doing business with a foreign reinsurance company.

Q: In terms of your business strategy focus, where is it for 2018?

A: That’s where it has always been. It’s Asia-Pacific. We are definitely an Asian-born reinsurer with aspirations to underwrite the entire world. We have been doing so quite from the beginning. That has influenced our results, altogether so far. The diversification impacts, specifically in 2017, were fantastically working. We still have around 60% Asia-Pacific business, but also well diversified. We have around 20% in Europe and 20% in North America. We will go on exactly like this. At the 2018 renewal we did exactly this, growing approximately 40% across all the areas and improving our technical combined ratio.